In this News.com article, Forrester Research is reported as suggesting that the current business models for public 802.11x Wi-Fi hotspots are inadequate. Forrester is quoted as saying, "We believe that much of the money being poured into public WLAN today to enable access...is being wasted." I have to disagree...somewhat.
The issue at hand is that current business models are proving unsustainable. Why? The first big reason is that current hotspot pricing is way out of line with what the market will bear. Stand-alone hotspots may require this type of pricing to meet industry ROI demands, but it's not a viable pricing strategy.
A second reason is cellular wireless access. 3G wireless technologies are giving most mobile business users wireless access that is good enough for most of their Internet needs (i.e., email). Mobile professionals often move from one high-speed wired connection to another (office to hotel, home to client office, etc.), so their wireless needs are often limited while in transit. That is, Joe business traveler can deal with having 40Kbps cellular access for a short while until he gets to a broadband connection.
So, the question moves from "how do we sustain stand-alone hotspots" to "how do we integrate wireless access into other services?" Wi-Fi access is a perfect ancillary service that can add value to various core services. Most services where the service provider wants his customers to "hang around" longer, or services where the customer is "trapped" there, are likely to benefit from offering free Wi-Fi access. Here's why.
Those services that generate revenue by virtue of customers being present in the system should provide Wi-Fi so that its customers have one more reason to stay (or one reason reason to leave). Coffee shops have already figured this out (the longer a patron stays, the more he/she consumes). Malls will probably be next to figure this out.
Public transit, hopsitals, and airports have customers that are there mostly because they have to be and would like to leave as soon as possible. However, while there, the customer would like to make the best use of his/her time as he or she can. Having wireless access to the Internet can make a big improvement in how these customers perceive their time in these environments, thus making them less resistant to spending time in these places. More time spent means more public support, better funding, increased maintenance and improvement, etc. -- all good things.
The cost of providing Internet service once the wireless infrastructure is in place is small, and the incremental cost (what it costs the service provider for each additional customer to use the system) is almost nil. This means that once the initial investment is made, the service is highly scalable and easily marketable without incurring large additional costs.
The rest of the story involves thinking creatively. It amazes me how rigidly business think of themselves sometimes. As an example, why aren't the airlines more interested in making the in-airport experience more enjoyable? It seems that most of the attention is being put on the time that the passenger spends on the plane, when often an equal amount is spent in airports.
In short, I do believe that public wireless Internet access will continue to grow, but it will require the rethinking of business models to make it happen. Just like any other new media, the early years are frought with bad models -- it is just a matter of time before the viable ones are developed and brought to market.
